Fast casual's formula is comfort sans costliness.

Fast casual—with its freshly prepared items and sub-$10 price points—answers consumers’ calls for quality, freshness and value, and the result has been continued sales growth for the segment. The top 15 fast-casual chains in this year’s Top 400 ranking (see the chart on this page) had combined 2007 sales of nearly $10.6 billion, up 14.9% (or nearly triple that of the total Top 400) from 2006.

Consumers trading down from casual dining find in fast casual a less-expensive but still pleasant dining experience—one that might offer the warm, upscale atmosphere cues of a fireplace or a hearth oven and the pricing advantages of $8 main-plate items and no tipping requirement, says Darren Tristano, executive vice president of Chicago-based consultancy Technomic Inc.

Of course, the growing availability of options in core markets breeds selectivity, and diner demands evolve as the number of fast-casual choices grows. As consumers in major urban and suburban hubs become familiar with a greater number of fast-casual concepts, they look increasingly for points of differentiation—a reason, whether related to food quality, availability of beer or wine, perceived value or overall dining experience, to name one operation their go-to spot.

Fast-casual operators are taking different tacks to subtly emphasize the elements of their operations that they hope will stand out in customers’ minds.

Twenty-six years after its founding, Richmond Heights, Mo.-based Panera Bread saw sales growth of 32.3% for 2007.

“One of the things that works in our favor is our price point, and I’m not interested in giving that up,” Fitch says. “I think the danger that the segment runs is that they start leaking too far into fullservice.”

The comment speaks to the fact that, as an “in-between” category, fast casual’s edges are blurry. Concepts boasting a variety of food-preparation and service styles readily claim to be part of the segment.

Some players, emphasizing the buzzwords of comfort and customization, seek to stand out with partial table service and as-you-like-it food selections. Broomfield, Colo.-based Noodles & Company offers both. The chain now allows customers to add or substitute any of six proteins and an assortment of vegetables in most entrées. Additionally, dishes are available in small and regular sizes.

“The guest has clearly become more demanding,” says Noodles president and CEO Kevin Reddy. “Guests really like to have control ... They like to be able to customize portion size, vegetables and noodles.”

Other fast-casual concepts continue to find success in delivering counter service only and in menuing some premade (but grilled to order) items. In 2007, for example, category leaders Chipotle and Panera posted sales growth of 32.3% and 18.8%, respectively, according to Top 400 data.

Where the fast-casual segment as a whole seeks to distinguish itself is in the freshness and/or all-natural status of ingredients and in the quality of items’ preparation. Billboards promoting Richmond Heights, Mo.-based Panera Bread’s April launch of new breakfast sandwiches boast that the grilled sandwiches are “made by bakers, not by microwaves.” Noodles touts the fact that in its stores, “there are no freezers, no microwaves, and no can openers.”

For Los Angeles-based Wolfgang Puck Bistro (not a Top 400 chain), a hyrbrid concept which offers fast-casual-style service in the morning and afternoon and full dining-room service at dinner, the message played up is the freshness of ingredients and quality of preparation associated with the Wolfgang Puck brand, says president Ron Biskin.

“Wolfgang Puck is known for quality first and foremost, and innovation,” Biskin says. “My take is that initially the lure of fast casual was 'I’m going to get a freshly prepared item very quickly.’ The bar has now been raised, and it’s not just a matter of convenience and speed … but I really want a choice of better food in that space.“

The “fresh” messages help answer the pressure that, Biskin says, fast casual faces on two fronts—casual dining above it and quick service below it. “The full-service casual players are trying to attract our customers by offering convenient to-go and pickup windows,” he says. “And QSR is trying to get our customers by improving the quality of their options.”

For fast-casual concepts, then, promoting some combination of customized menu selections, fresh preparation and a comfortable dining environment becomes paramount.

“Where it’s at now is really the whole package,” says Keith Kinsey, Noodles & Company’s chief operating officer. “It’s the food, the décor, the experience, the interaction, the freshness of the food all combined into one.”

All of the details matter, too. Higher-quality ingredients count for little with consumers if a hot dish is served cold or if the restaurant looks significantly worse for the wear by the middle of the lunch crush.

“You can’t [be lazy with] the experience,” Tijuana Flats’ Fitch says. “You have to nail it, every time.”